Loading...
HomeMy WebLinkAboutMINUTES - 06091998 - D3 Z 3 THE BOARD OF SUPERVISORS OFZONTRA COSTA COUNTY,CALIFORNIA Adopted this Order on JUNE 9, 1998 ,by the following vote: AYES: SUPERVISORS UILKEMA, GERBER, DESAULNIER, CANCIAMILLA and ROGERS NOES: NONE ABSENT: NONE ABSTAIN: NONE Resolution No.: X1,31-1 SUBJECT: Approving a Disposition, Development and Loan Agreement between the Redevelopment Agency and North Richmond Commercial Development,Inc. for the North Richmond Commercial Center and Making Findings and Granting Approvals Pursuant to the California Community Redevelopment Law in Connection with Such Agreement The Contra Costa County Board of Supervisors RESOLVES THAT: The Board of Supervisors(the "Board")of the County of Contra Costa(the "County") has adopted the North Richmond Redevelopment Plan by Ordinance No. 87-50 on July 1, 1987 (the "Redevelopment Plan"). The Redevelopment Plan sets forth a plan for redevelopment of the North Richmond Redevelopment Project Area(the"Project Area"). The Redevelopment Agency of the County of Contra Costa(the"Agency")is responsible for administering the Redevelopment Plan to cause redevelopment of the Project Area,including assembly,site preparation and redisposition of property within the Project Area for private redevelopment consistent with the Redevelopment Plan. The Agency has assembled an approximately.8 acre site(the"Site")in the block bounded by Second,Third,Grove and Chesley Streets in the Project Area. The Agency desires to cause redevelopment of the Site through construction of an approximately 10,000 square foot neighborhood-serving commercial center,including retail and commercial space, and related parking,landscaping and ancillary facilities(the"Commercial Center"),to further economic development and community revitalization goals of the Agency. The County has approved a final development plan for the Site and adjoining properties for a mixed-use development which includes the Commercial Center,a 5,000 square foot County health center, and 52 units of senior housing(the"Mixed-Use Development"). The Agency has selected North Richmond Commercial Development,Inc., a California nonprofit public benefit corporation(the"Developer")to serve as the developer of the Commercial Center on the Site. The Agency desires to enter into a disposition, development and loan agreement(the "DDLA")with the Developer, substantially in the form on file with the County Clerk and the Agency Secretary,under which the Agency would sell the Site to the Developer and make the Agency Loan to the Developer and the Developer would develop and operate the Commercial Center on the Site. Redevelopment of the Site pursuant to the DDLA would serve major Redevelopment Plan goals and objectives by eliminating blight and redeveloping a major underutilized site in the Project Area,by providing commercial space to serve neighborhood service and shopping needs, and by expanding employment opportunities in the Project Area. 3201061112202.1 1 The Agency has placed on file a copy of the DDLA and the summary called for in Health and Safety Code Section 33433 (the"Section 33433 Summary"),and has made the DDLA and the Section 33433 Summary available for public inspection and copying pursuant to Health and Safety Code Section 33433. The Section 33433 Summary is incorporated in this Resolution by this reference. The Board and the Agency have conducted a duly noticed public hearing on the DDLA pursuant to Health and Safety Code Section 33433 for the purpose of receiving the input and comments of the public on the DDLA. The County,serving as "lead agency" under the California Environmental Quality Act and the applicable state and local implementing guidelines("CEQA"),has prepared and certified a negative declaration in connection with the approval of the final development plan for the Mixed-Use Development(County File No.DP973010)(the"Negative Declaration"), a copy of which is on file with the County Clerk,which has served as the environmental documentation for the Agency's consideration of the DDLA and the transactions contemplated by the DDLA. By staff report accompanying this Resolution and incorporated into this Resolution by this reference(the "Staff Report"),the Board has been provided with additional information upon which the findings and actions set forth in this Resolution are based. NOW,THEREFORE,BE IT RESOLVED that the Board certifies its review and consideration of the Negative Declaration in accordance with CEQA and finds and determines that the Negative Declaration adequately addresses the environmental issues pertaining to the actions contemplated by the DDLA and the development of the Commercial Center and properly concludes that the development of the Commercial Center will not have a significant effect on the environment;that no substantial changes have been proposed in the Commercial Center that will require revisions of the Negative Declaration due to the involvement of new significant environmental impacts or a substantial increase in the severity of previously identified environmental impacts; that no substantial changes have occurred with respect to the circumstances under which the project is undertaken; and that no new information of substantial importance regarding environmental impacts of the project has become available;therefore,no finther environmental documentation is required to be prepared in connection with the approval of this Resolution pursuant to 14 Cal. Code of Regulations, Section 15162(x). BE IT FURTHER RESOLVED,that the County Clerk is hereby authorized and directed to file a Notice of Determination in accordance with 14 Cal. Code of Regulations,Section 15096(i). BE IT FURTHER RESOLVED,that based on the information and analysis set forth in the Negative Declaration,there is no evidence that the actions contemplated by the DDLA, including development of the Commercial Center on the Site,would have any potential for adverse impact on wildlife resources, and,therefore, a Certificate of Fee Exemption will be submitted with the Notice of Determination filed in connection with the DDLA approval,as required by Public Resources Code Section 21089. BE IT FURTHER RESOLVED,that pursuant to Health and Safety Code Section 33433, the Board hereby finds that the consideration to be given by the Developer under the DDLA is not less than the fair reuse value of the Site at the use and with the covenants,conditions, and development costs authorized by the DDLA. This finding is based on the facts and analysis set forth in the Staff Report and the Section 33433 Summary accompanying this Resolution. BE IT FURTHER RESOLVED,that pursuant to Health and Safety Code Section 33433, the Board hereby finds that the conveyance of the Site pursuant to the DDA will assist in the elimination of blight in the Project Area and is consistent with the implementation plan adopted pursuant to Health and Safety Code Section 33490. These findings are based on the facts and analysis set forth in the Section 33433 Summary and the Staff Report accompanying this Resolution. BE IT FURTHER RESOLVED,that pursuant to Health and Safety Code Section 33433, the Board hereby approves the DDLA and all ancillary documents; approves.execution by the 320\06\112202.1 2 �.3 Agency of the DDLA and all ancillary documents in substantially the form on file with the County Clerk and the Agency Secretary,with such changes as are approved by the Agency signatory(such approval to be conclusively evidenced by the execution of the DDLA); and approves the conveyance of the Site by the Agency pursuant to the provisions of the DDLA. BE IT FURTHER RESOLVED,that this Resolution shall take immediate effect upon its adoption. I hereby certify that the foregoing is a true and correct copy of an action taken and entered on the minutes of the Board of Supervisors on the date shown. ATTESTED: Phil Batcl r, Clerk of t1fe Board of Super 's and County Administrator Ire June L. McHuen, Deputy Clerk 3201061112202.1 3 NORTH RICHMOND COMMERCIAL CENTER SUMMARY OF A PROPOSED DISPOSITION, DEVELOPMENT AND LOAN AGREEMENT BETWEEN THE REDEVELOPMENT AGENCY OF CONTRA COSTA AND NORTH RICHMOND COMMERCIAL DEVELOPMENT INCORPORATED (Prepared pursuant to Health and Safety Code Section 33433) The California Health and Safety Code, Section 33433, requires that if a redevelopment agency wishes to sell or lease property to which it holds title and if that property was acquired in whole or in part with property tax increment funds, the agency must first secure approval of the proposed sale or lease agreement from its local legislative body after a public hearing. A copy of the proposed sale or lease agreement and a summary report that describes and contains specific financing elements of the proposed transactions shall be available for public inspection prior to the public hearing. On June 9, 1398, a public hearing of the Redevelopment Agency will be held regarding approval of a Disposition, Development and Loan Agreement(the"DDLA") between the Redevelopment Agency of the County of Contra Costa(the"Agency") and North Richmond Commercial Development, Inc. (the".Developer"). The DDLA provides for the conveyance of certain real property by the Agency to the Developer and the construction by the Developer of up to ten thousand (10,000) square feet of a commercial center(the"Center") on the Property. The proposed DDLA provides for the Agency to convey the certain real property located within the North Richmond Redevelopment Project Area("Project Area")on the block bounded by 2nd, 3rd, Chesley, and Grove, as more particularly described in Exhibit A attached to this report (the "Property"). The Developer will own in fee the new improvements to be constructed on the Property. This Summary has been prepared and made available to the public in accordance with the requirements of Health and Safety Code 33433, which requires provision of the following information: a. The cost of the agreement to the redevelopment agency, including land acquisition costs, clearance costs, relocation costs, the costs of any improvements to be provided by the agency, plus the expected interest on any loans lir bonds to finance the agreement(Section 5); b. The estimated value of the interest to be conveyed or leased, determined at the 1 lk3 highest and best use permitted under the redevelopment plan (Section 6); C. The estimated value of the interest to be conveyed in accordance with the uses, covenants, and development casts required under the proposed agreement with the Agency (Section 6); d. An explanation of why the sale or lease of the property will assist in the elimination of blight, as required by Section 33433 (Section 7); and e. The purchase price or sum of the lease payments which the lessor will be required to make during the term of the lease. If the sale price or total rental amount is less than the fair market value of the interest to be conveyed or leased, determined at the highest and best use consistent with the redevelopment plan,then the agency shall provide as part of the summary an explanation of the reasons for the difference(Section 5). In addition to the statutorily required information, this ;Summary also provides as background information a description of the development to be undertaken pursuant to the DDLA(Section2), an outline of the Developer and the Agency responsibilities under the DDLA(Sections 3 and 4), and description of the conformity of the development with the Implementation Plan (Section 8). 2. D SOUTION OF Pit CT AND SEFE The commercial center is one component of a total development to be located on the Property. The total development includes fifty-two residential rental units for very low and moderate income elderly households, a Center for Health of approximately five thousand (5,000) square feet, and the commercial center. On August 23, 1994, the Redevelopment Agency held a public hearing and approved a Disposition, Development and Loan Agreement between the Agency, the County,of Contra Costa (the"County") and Community Housing Development Corporation of North Richmond and Eden Housing, Inc. to develop the senior housing component of the project, which is anticipated to begin construction in July 1998, The Center for Health is already under construction and is expected to be completed by March 1999. The DDLA for the commercial center will provide for the last crucial piece to complete the total development. The Agency will convey the Property to the Developer and the Developer will construct the commercial center. The Center will consist of office space for area service providers., a sheriff office, neighborhood-serving retail space, potentially a restaurant, and landscaping. The site consists of seven (7) total parcels and portions of an additional six(6)parcels. The parcels are mid-block, fronting on both 2nd and 3rd Streets. The Center is located between the Center for Health and the senior housing project. The Property for the Center is approximately 35,400 sq.ft (0.80 acres) of land. 2 T.3 3. BE ELOPER RESPONSIBUXUS As a condition precedent to the Agency obligation to sell and convey the Property to the Developer, the Developer shall: a. Provide all predevelopment services necessary for the construction of the Center. b. Apply to the County for, and diligently pursue procurement of, all County permits and approvals necessary for the construction of the Center. C. Submit to the Agency a Financing Plan for financing the development and operation of the Center, including a cash flour projection, cost breakdowns, and documentation of financing sources. d, Submit to the Agency the Final Construction Plans for the Center, consistent with the Conceptual Site Plan, and apply to the County for a building permit for construction of the Center. The Developer will deliver evidence to the Agency that the Developer is entitled to issuance of a building permit upon payment of permit fees. Presuming that the above conditions are met, and subject to the specific terms and conditions stated in the DDLA, the Developer shall: a. Purchase the Property for$427,556, which is equal t the total of the Agency's land acquisition, relocation, demolition and maintenance costs for the Property. b. Accept a lean from the Agency to finance the cost of the Developer's acquisition of the Property and construction of the Center(see section 4.b, below). C. Diligently construct the Center improvements on the Property as well as a,parking lot for joint use by the commercial center and the Center for Health in accordance with the approved Final Construction Plans and within the time frame specified in the DDLA. d. Operate the Center in accordance with the requirements of the DDLA. 4. AGENCY RES,pDNSi ILI FS Presuming that the Developer's predisposition responsibilities described above are met, and subject to the specific terms and conditions stated in the DDLA, the Agency shall: a. Convey the Property to the Developer, pursuant to the conditions of the DDLA. 3 b. Provide a lean in the amount of up to One Million Three Hundred and Seventy- Seven Thousand Five Hundred and Fifty-Seven Dollars($1,377,.557)consisting of $427,556 in seller carryback financing for the sale of the Property, and up to $950,000 to finance predevelopment and construction costs of the Center. The loan shall bear simple interest of three percent(3%)per annum. The principal and interest will be payable from residual receipts of the Center after payment of operating costs, and will be due in full on the earlier to occur of the following: (i) upon an Event of Default by the Developer, pursuant to the DDLA; or(ii)30 years from the date of the DDLA. Maximum amount of Agency lean beyond the funds to acquire, relocate, demolish, and maintain the site. Developer is,seeking additional financial assistance from other public and private sources. Any funds leveraged from another source will reduce the total Agency loan amount dollar- for-dollar. 5. SS's OF THE AGR'' MEN'S 10T. .GEN This section presents the total cost of the DDLA to the Agency, as well as the"net cost" of the project after consideration of the project revenues. Estimated Cost to the Agency For this agreement, the gross costs to the Agency are: Acquisition Costs $ 354,565 Relocation Costs 21,972 Demolition, Clearance&Maintenance 51,019 Agency Loan (Predevelopment And Construction Component) 250.1301' Total $1,377,557 The Agency will fund the Costs of the Center using tax increment revenues from the North Richmond Redevelopment Project Area and funds loaned to the Agency by the County from its Affordable Housing Trust Fund. No bonds were sold to finance the Center. However, the Agency will be obligated to a 3% interest on the loan from the County. 6. YALUE Of THE INIERESI,TO I)E CONVEYED A. Fair Market Value ' Maximum amount of Agency loan beyond the funds to acquire, relocate; demolish, and maintain the site. Developer is seeking additional financial assistance from other public and private sources. Total Agency loan amount will be reduced dollar-for-dollar by the amount leveraged from another source. 4 -D..3 The fair market value of the Property is $354,565. This value is based on the Agency's costs to acquire the Property, which were based on appraisals of the Property at the highest and best use permitted by the Redevelopment Plan. B. Reuse Value The reuse value for the Property is directly a function of the development economics for the specific development required to be constructed under the terms and conditionsof the Disposition, Development and Loan Agreement. Any project income not required to support the development and operating costs of a project may be attributed to the value of the underlying land. The Agreement requires the construction and operation of commercial center consisting of neighborhood-serving retail, office space for area service providers, a sheriff office, potentially a restaurant, and landscaping. The DDLA includes covenants and conditions that impact the financial feasibility of the development and thus the value of the interests conveyed to the Developer. This reuse analysis assumes satisfaction with these covenants and conditions. The reuse conditions for the Center are as follows. (1) Developer must satisfy all the terms and conditions of the DILA and begin development soon after conveyance. (2) The Center must agree with the final site plan approved by the Agency. The building must contain neighborhood-serving commercial space, office space for the sheriff and other area serving service providers, potentially a restaurant, and landscaping. The Center must be used to further economic development and/or community revitalization objectives. (3) The Developer will have a local hire obligation which requires that Project Area residents are provided the first opportunity for any and all employment opportunities resulting from the Center. (4) The Center can only be transferred to another party with written consent of the Agency. All covenants and conditions stipulated in the Agreement must be assumed by any subsequent party. (5) The Developer must construct a joint use parking lot to service the Center for Health and the Center. The Developer is unable to procure conventional private financing for the Center, as discussed in Section 4 above. The anticipated revenue from the Center, given the Agency's use requirements, 5 is not sufficient to support a loan to finance development costs. Even with all net operating income of the Center dedicated to repayment of the Agency Loan, only approximately $6,000 per year in the early years of the project, up to approximately $12,000 per year in latter years, or a total of approximately $330,000 over 30 years is available to pay debt service on the Agency loan. This amount is insufficient to repay the Predevelopment and Construction Component of the Agency Loan. Therefore, no revenue is available from the Center to pay land costs. Ey definition, then, the residual value of the Property,valued taking into account the restrictions imposed by the DDLA, is zero. Although a purchase price of zero would be justified by this analysis, the Agency is requiring the Developer to execute a promissory note that includes the total Agency cost for land acquisition and site preparation, giving the Agency the ability to recapture these costs in the event the Center generates additional income beyond that which is currently anticipated. The purchase price is less than the fair market value of the land, determined at the highest and best uses permitted under the Redevelopment Plan; this is because the Agency is conveying the Property subject to the requirements of the DDLA, which imposes significant restrictions on the use of the Property that reduces the amount of income that may be generated for the Property. The use restrictions further the economic revitalization goals of the Agency and will aid in the elimination of blight in the Project Area. As noted above, although the purchase price is less than the fair market value of the Property, it is greater than the reuse value, taking into account the Agency's use restrictions. 7. R PUBLIC BENEFITS The redevelopment of the Property pursuant to the DDLA will provide several public benefits, as follows: a. The redevelopment of the Property will eliminate a serious blighting influence in the Project Area. As described in documents set forth in Exhibit B (which documents are incorporated in this Summary by this reference), various parcels in this portion of the Project Area are characterized by deterioration; dilapidation, obsolescence, and mixed and shifting uses that have a deleterious physical and economic impact on surrounding parcels. The Property is a classic example of this documented blighting condition. The majority of the improvements were built between 1925 and 1960, with two residential structures built around 1989. The improvements were in both fair and deteriorating condition. There was one substandard non-residential unit and six residential uses which were in fair or seriously dilapidated condition. Two residential units in fair condition were relocated onto another parcel within the Project Area. The remaining improvements were demolished to allow the Developer to construct the Center. The Center will contribute to the elimination of the former physical blight on the Property and will serve as a catalyst for private reinvestment to eliminate physical conditions of blight on nearby parcels in the 6 Project Area. b. Implementation of the DDLA will provide attractive commercial, retail and other non-residential space which will serve as a further catalyst for private reinvestment in the Project Area. C. Implementation of the DDLA will serve a goals and objectives set forth in Part IV of the Redevelopment Plan, including goals and objectives related to: (l) Strengthening the existing residential neighborhood through development of a neighborhood commercial district, street improvement and landscaping, and expansion of community facilities(Goal 2). (2) Encouraging the development of community facilities(Objective 2). S. CONFORMANCE W11N B 122Q DIPLEMNTATION PIAN A major goal of the North Richmond Redevelopment and Implementation(AD 1290) Plans is to improve and expand the supply of economic and employment related development in the Project Area. The goals derived from the priorities stated in the Redevelopment Plan to promote the economic development component of the Project Area include: a. Facilitate economic development, stimulate and attract private investment, and create employment opportunities for area residents; b. Improve the infrastructure and public facilities; C. Expand and improve the commercial and neighborhood service opportunities; d. Encourage and support public-private partnerships which address community needs; e. Encourage and support citizen participation; f Capitalize on existing and future financing resources and opportunities; g. Eliminate blighting influences and remove impediments to development; and h. Provide the framework to restore the economic and social health through public and private actions. To accomplish these goals, the Agency has acquired the Property to sell and convey to the Developer for development of the Center. The construction of the Center is a specifically identified and budgeted activity in the Implementation Plan. The construction of the Center, both independently and in combination with the development of the senior housing and Center for Health, will achieve the goals specifically identified in the Implementation Plan. 7 _..... ......... ... ....... ............... _........ .................................... _...._.. ......... ......... ..._............ . _ ............................................................................ EXHIBIT A • Senior Housing Property OLOCk Z( o m 69°'59't5 c5"Vv W _1 J b b 0 O 11 44. 00 0 9e9+5q'o o�W 0 ,` � 1I aD C) fib 0 Commercial Center , #— o ! J 5TREET >°1 til gay re-3,s�oy� 21 U7 W Uj f o J cx 7 5.00` + Cter For p Health _N r _ 0 t 0 0 9 0 x 041 r N84R°sR`4a" E CNE5LEY AVENUE ........ ......... ......... _ .. .... .......... .._._...... ......... ......... _...... ......... _ _ _...._.. ......._. ......... .................. ...... ............... ....__._. .......... s EXHIBIT B DOCUMENTS CONTAINING EVIDENCE OF BLIGHTING CONDITIONS RELEVANT TO THE PROPERTY 1. Redevelopment Plan for the North Richmond Redevelopment PrDj= Ar= adopted July 14, 1987. 2. Prdinlinary Repot on the North Richmond Area Redevelopment PrQ.ject, adopted March 24, 1987. 3. Draft Environmental Imt Report for the&developmenj Plan of the North Richmond Redeyglopmgnt 1!rQject Area, submitted April 1987. 4. Contra Costa County AD 1290 Implementation Plan, adopted December 1994. 8 THE REDEVELOPMENT AGENCY OF CONTRA COSTA COUNTY,CALIFORNIA Adapted this Order on JUNE 9, 1998 ,by the following vote: AYES: SUPERVISORS UILKEMA, GERBER, nESAUINIER, CANCIAMILLA and ROGERS NOES: NONE ABSENT: NONE ABSTAIN: NONE Resolution No.: g8-•2 SUBJECT: Authorizing Execution of a Disposition,Development and Loan Agreement with Noah Richmond Commercial Development,Inc.for the North Richmond Commercial Center and Making Findings and Granting Approvals Pursuant to the California Community Redevelopment Law in Connection with Such Agreement The Contra Costa County Redevelopment Agency RESOLVES THAT: The Board of Supervisors(the"Board")of the County of Contra Costa(the"County") has adopted the North Richmond Redevelopment Plan by Ordinance No. 87-50 on July 1, 1987 (the"Redevelopment Plan"). The Redevelopment Plan sets forth a plan for redevelopment of the North Richmond Redevelopment Project Area(the"Project Area"). The Redevelopment Agency of the County of Contra Costa(the"Agency") is responsible for administering the Redevelopment Plan to cause redevelopment of the Project Area, including assembly,site preparation and redisposition of property within the Project Area for private redevelopment consistent with the Redevelopment Plan. The Agency has assembled an approximately .8 acre site(the"Site")in the block bounded by Second, Third, Grove and Chesley Streets in the Project Area. The Agency desires to cause redevelopment of the Site through construction of an approximately 10,000 square foot neighborhood-serving commercial center,including retail and commercial space, and related parking, landscaping and ancillary facilities(the"Commercial Center"), to flu-ther economic development and community revitalization goals of the Agency. The County has approved a final development plan for the Site and adjoining properties for a mixed-use development which includes the Commercial Center,a 5,000 square foot County health center,and 52 units of senior housing(the"Mixed-Use Development"). The Agency has selected North Richmond Commercial Development, Inc., a California nonprofit public benefit corporation(the"Developer")to serve as the developer of the Commercial Center on the Site. Pursuant to Health and Safety Code Section 33753,the Agency desires to make a loan in the amount of$1,377,557 to the Developer to finance the development of the Commercial Center (the "Agency Loan"),which Agency Loan is part of the financing for the Mixed-Use Development,as described in the Financing Plan attached hereto and incorporated herein as Exhibit A(the "Financing Plan"). The Agency desires to enter into a disposition, development and loan agreement(the "DDLA")with the Developer, substantially in the form on file with the County Clerk and the Agency Secretary, under which the Agency would sell the Site to the Developer and make the Agency Loan to the Developer and the Developer would develop and operate the Commercial Center on the Site. 320\06\111983.1 1 T•3 BE IT FURTHER RESOLVED,that pursuant to Health and Safety Code Section 33433, the Agency hereby finds that the consideration to be given by the Developer under the DDLA is not less than the fair reuse value of the Site at the use and with the covenants,conditions, and development costs authorized by the DDLA. This finding is based on the facts and analysis set forth in the Staff Report and the Section 33433 Summary accompanying this Resolution. BE IT FURTHER.RESOLVED,that pursuant to Health and Safety Code Section 33433, the Agency hereby finds that the conveyance of the Site pursuant to the DDA will assist in the elimination of blight in the Project Area and is consistent with the implementation plan adopted pursuant to Health and Safety Code Section 33490. These findings are based on the facts and analysis set forth in the Section 33433 Summary and the Staff Report accompanying this Resolution. BE IT FURTHER RESOLVED,that pursuant to Health and Safety Code Section 33433, the Agency hereby approves the DDLA and all ancillary documents, approves execution by the Deputy Director—Redevelopment of the Agency of the DDLA and all ancillary documents in substantially the forth on file with the County Clerk and the Agency Secretary,with such changes as are approved by the Agency signatory(such approval to be conclusively evidenced by the execution of the DDLA), approves the making of the Agency Loan; and approves the conveyance of the Site by the Agency pursuant to the provisions of the DDLA. I hereby certify that the foregoing is a true and correct copy of an action taken and entered on the minutes of the Board of Supervisors on the date shown. ATTES'T`ED: Phil Bate r, Clerk of t e Board of Supervisors and County Administrator June L. McHuen, Deputy Clerk 320/06/1119831 3 NORTH RICHMOND COMMERCIAL CENTER SUMMARY OF A PROPOSED DISPOSITION, DEVELOPMENT AND LOAN AGREEMENT BETWEEN THE REDEVELOPMENT AGENCY OF CONTRA COSTA AND NORTH RICHMOND COMMERCIAL DEVELOPMENT INCORPORATED (Prepared pursuant to Health and Safety Cade Section 33433) 1, INTRODUCTION The California Health and Safety Code, Section 33433, requires that if a redevelopment agency wishes to sell or lease property to which it holds title and if that property was acquired in whole or in part with property tax increment funds, the agency:must first secure approval of the proposed sale or lease agreement from its local legislative body after a public herring. A copy of the proposed sale or lease agreement and a summary report that describes and contains specific financing elements of the proposed transactions shall be available for public inspection prior to the public hearing. On lune 9, 1998, a public hearing of the Redevelopment Agency will be held regarding approval of a Disposition, Development and Loan Agreement(the"DDLA')between the Redevelopment Agency of the County of Contra Costa(the"Agency") and North Richmond Commercial Development, Inc. (the"Developer"). The DDLA provides for the conveyance of certain real property by the Agency to the Developer and the construction by the Developer of up to ten thousand (10,000) square feet of a commercial center(the"Center") on the Property. The proposed DDLA provides for the Agency to convey the certain real property located within the North Richmond Redevelopment Project Area("Project Area")on the block bounded by 2nd, 3rd, Chesley, and Grove, as more particularly described in Exhibit A attached to this report (the "Property"). The Developer will own in fee the new improvements to be constructed on the Property. This Summary has been prepared and made available to the public in accordance with the requirements of Health and Safety Code 33433, which requires provision of the following information: a. The cost of the agreement to the redevelopment agency, includingland acquisition costs, clearance costs, relocation casts, the costs of any improvements to be provided by the agency, plus the expected interest on any loans or bonds to finance the agreement (Section 5), b. The estimated value of the interest to be conveyed or leased, determined at the 1 �7 ,3 highest and best use permitted under the redevelopment plan (Section 6); C. The estimated value of the interest to be conveyed in accordance with the uses, covenants, and development costs required under the proposed agreement with the Agency(Section 6); d. An explanation of why the sale or lease of the property will assist in the elimination of blight, as required by Section 33433 (Section 7); and e. The purchase price or sum of the tease payments which the lessor will be required to make during the term of the lease. If the sale price or total rental amount is less than the fair market value of the interest to be conveyed or leased, determined at the highest and best use consistent with the redevelopment plan, then the agency shall provide as part of the summary an explanation of the reasons for the difference(Section 5). In addition to the statutorily required information, this Summary also provides as background information a description of the development to be undertaken pursuant to the DDLA(Section2 }, an outline of the Developer and the Agency responsibilities under the DDLA(Sections 3 and 4), and description of the conformity of the development with the Implementation Plan(Section 8). 2. DEC. 110N OF FROIECT ANDSM The commercial center is one component of a total development to be located on the Property. The total development includes fifty-two residential rental units for very low and moderate income elderly households, a Center for Health of approximately five thousand (5,000) square feet, and the commercial center. On August 23, 1494, the Redevelopment Agency held a public hearing and approved a Disposition, Development and Loan Agreement between the Agency, the County of Contra Costa (the"County") and Community Housing Development Corporation of North Richmond and Eden Housing, Inc. to develop the senior housing component of the project, which is anticipated to begin construction in July 1948. The Center for Health is already under construction and is expected to be completed by March 1999. The DDLA for the commercial center will provide for the last crucial piece to complete the total development. The Agency will convey the Property to the Developer and the Developer will construct the commercial center. The Center will consist of office space for area service providers, a sheriff office, neighborhood-serving retail space, potentially a restaurant, and landscaping. The site consists of seven (7) total parcels and portions of an additional six(6)parcels. The parcels are mid-block, fronting; on both 2nd and 3rd Streets, The Center is located between the Center for Health and the senior housing project. The Property for the Center is approximately 35,000 sq.ft (0.80 acres) of land. 2 3. DEVELOPER RESP SIB.TL As a condition precedent to the Agency obligation to sell and convey the Property to the Developer, the Developer shall: a. Provide all predevelopment services necessary for the construction of the Center. b. Apply to the County for, and diligently pursue procurement of, all County permits and approvals necessary for the construction of the Center. C. Submit to the Agency a Financing Plan for financing the development and operation of the Center, including a cash flow projection, cost breakdowns, and documentation of financing sources. d. Submit to the Agency the Final Construction Plans for the Center, consistent with the Conceptual Site Plan, and apply to the County for a building permit for construction of the Center. The Developer will deliver evidence to the Agency that the Developer is entitled to issuance of a building permit upon payment of permit fees. Presuming that the above conditions are met, and subject to the specific terms and conditions stated in the DDLA, the Developer shall: a. Purchase the Property for$427,556, which is equal t the total of the Agency's land acquisition, relocation, demolition and maintenance costs for the Property. b. Accept a loan from the Agency to finance the cost of the Developer's acquisition of the Property and construction of the Center(see section 4.b. below). C. Diligently construct the Center improvements on the Property as well as a parking lot for joint use by the commercial center and the Center for Health in accordance with the approved Final Construction Plans and within the time frame specified in the DDLA. d. Operate the Center in accordance with the requirements of the DDLA. 4, ICY RESPONSIBILITIES Presuming that the Developer's predisposition responsibilities described above are met, and subject to the specific terms and conditions stated in the DDLA, the Agency shall: a. Convey the Property to the Developer, pursuant to the conditions of the DDLA. 3 b. Provide a loan in the amount of up to One Million Three Hundred and Seventy- Seven Thousand Five Hundred and Fifty-Seven Dollars($1,377,557)consisting of $427,556 in seller carryback financing for the sale of the Property, and up to $950,000 to finance predevelopment and construction costs of the Center. The loan shall bear simple interest of three percent(3%) per annum. The principal and interest will be payable from residual receipts of the Center after payment of operating costs, and will be clue in full on the earlier to occur of the following: (i) upon an Event of Default by the Developer, pursuant to the DDLA; or(ii) 30 years from the date of the DDLA.. Maximum amount of Agency loan beyond the funds to acquire, relocate, demolish, and maintain the site. Developer is seeking additional financial assistance from other public and private sources. Any funds leveraged from another source will reduce the total Agency loan',amount dollar- for-dollar. 5. C!QST OF THE &GREEMENT TO THE AMCY This section presents the total cost of the DDLA to the Agency, as well as the"net cost" of the project after consideration of the project revenues. Estimated Cost to the Agency For this agreement, the gross costs to the Agency are: Acquisition Costs $ 354,565 Relocation Costs 21,972 Demolition, Clearance&Maintenance 51,019 Agency Loan (Predevelopment And Construction Component) 950,001' Total $1,377,557 The Agency will fund the costs of the Center using tax increment revenues from the North Richmond Redevelopment Project Area and funds loaned to the Agency by the County from its Affordable Housing Trust Fund. No bonds were sold to finance the Center. However, the Agency will be obligated to a 3% interest on the loan from the County. A. Fair Market "value ' Maximum amount of Agency loan beyond the funds to acquire, relocate, demolish, and maintain the site. Developer is seeking additional financial assistance from other public and private sources. Total Agency loan amount will be reduced dollar-for-dollar by the amount leveraged from another source. 4 D.3 The fair market value of the Property is $354,565. This value is based on the Agency's costs to acquire the Property, which were based on appraisals of the Property at the highest and best use permitted by the Redevelopment Plan. B. Reuse Value The reuse value for the Property is directly a function of the development economics for the specific development required to be constructed under the terms and conditionsof the Disposition, Development and Loan Agreement. Any project income not required to support the development and operating costs of a project may be attributed to the value of the underlying land. The Agreement requires the construction and operation of a commercial center consisting of neighborhood-serving retail, office space for area service providers, a sheriff office, potentially a restaurant, and landscaping. The DDLA includes covenants and conditions that impact the financial feasibility of the development and thus the value of the interests conveyed to the Developer. This reuse analysis assumes satisfaction with these covenants and conditions. The reuse conditions for the Center are as fellows. (1) Developer must satisfy all the terms and conditions of the DDLA'and began development soon after conveyance. (2) The Center must agree with the final site plan approved by the Agency. The building must contain neighborhood-serving commercial space, office space for the sheriff`and other area serving service providers, potentially a restaurant, and landscaping. The Center must be used to further economic development and/or community revitalization objectives. (3) The Developer will have a local hire obligation which requires that Project Area residents are provided the first opportunity for any and all employment opportunities resulting from the Center. (4) The Center can only be transferred to another party with written consent of the Agency. All covenants and conditions stipulated in the Agreement,must be assumed by any subsequent party. (5) The Developer must construct a joint use parking lot to service the Center for Health and the Center. The Developer is unable to procure conventional private financing for the Center,',as discussed in Section 4 above. The anticipated revenue from the Center, given the Agency's use requirements, 5 is not sufficient to support a loan to finance development casts. Even with all net operating income of the Center dedicated to repayment of the Agency Loan, only approximately$6,000 per year in the early years of the project, up to approximately$12,000 per year in later years, or a total of approximately $330,000 over 30 years is available to pay debt service on the Agency loan. This amount is insufficient to repay the Predevelopment and Construction Component of the Agency Loan. Therefore, no revenue is available from the Center to pay land casts. By definition, then, the residual value of the Property, valued taking into account the restrictions imposed by the DILA, is zero. Although a purchase price of zero would be justified by this analysis, the Agency is requiring the Developer to execute a promissory note that includes the total Agency cost for land acquisition and site preparation, giving the Agency the ability to recapture these costs in the event the Center generates additional income beyond that which is currently anticipated. The purchase price is less than the fair market value of the land, determined at the highest and best uses permitted under the Redevelopment Plan; this is because the Agency is conveying the Property subject to the requirements of the DDLA, which imposes significant astrictions on the use of the Property that reduces the amount of income that may be generated for the Property. The use restrictions further the economic revitalization goals of the Agency and will aid in the elimination of blight in the Project Area. As noted above, although the purchase price is less than the fair market value of the Property, it is greater than the reuse value, taking into account the Agency's use restrictions. 7. ELIMINATION OF BLIGHT AND OTHER MBLIC BENEFITS The redevelopment of the Property pursuant to the DDLA will provide several public benefits, as follows: a. The redevelopment of the Property will eliminate a serious blighting influence in the Project Area. As described in documents set forth in Exhibit B (which documents are incorporated in this Summary by this reference), various parcels in this portion of the Project Area are characterized by deterioration, dilapidation, obsolescence, and mixed and shifting uses that have a deleterious'physical and economic impact on surrounding parcels. The Property is a classic example of this documented blighting condition. The majority of the improvements were built between 1925 and 1960, with two residential structures built around 1989. The improvements were in bath fair and deteriorating condition. There was one substandard non-residential unit and six residential uses which were in fair or seriously dilapidated condition. Two residential units in fair condition were relocated onto another parcel within the Project Area. The remaining improvements were demolished to allow the Developer to construct the Center. The Center will contribute to the elimination of the former physical blight on the Property and will serve as a catalyst for private reinvestment to eliminate physical conditions of blight on nearby parcels in the 6 Project Area. b. Implementation of the DDLA will provide attractive commercial, retail and other non-residential space which will serve as a further catalyst for private reinvestment in the Project Area, C. Implementation of the DDLA will serve a goals and objectives set forth in Part IV of the Redevelopment Plan, including goals and objectives related to: (1) Strengthening the existing residential neighborhood through development of a neighborhood commercial district, street improvement and landscaping, and expansion of community facilities(Goal 2). (2) Encouraging the development of community facilities(Objective 2). 8. C NEUBMANI E WIIH AB 12"_MULEMENTAIION n AN A major goal of the forth Richmond Redevelopment and Implementation(AB 1290) flans is to improve and expand the supply of economic and employment related development in the Project Area. The goals derived from the priorities stated in the Redevelopment Plan to promote the economic development component of the Project Area include: a. Facilitate economic development, stimulate and attract private investment, and create employment opportunities for area residents; b. Improve the infrastructure and public facilities; C. Expand and improve the commercial and neighborhood service opportunities; d. Encourage and support public-private partnerships which address community needs; e. Encourage and support citizen participation; f. Capitalize on existing and future financing resources and opportunities; g. Eliminate blighting influences and remove impediments to development; and h. Provide the framework to restore the economic and social health through public and private actions. To accomplish these goals, the Agency has acquired the Property to sell and convey to the Developer for development of the Center. The construction of the Center is a specifically identified and budgeted activity in the Implementation Plan. The construction of the Center, both independently and in combination with the development of the senior housing and Center for Health, will achieve the goals specifically identified in the Implementation Plan. 7 EXHIBIT A -D- 3 3 Senior Housing Property L3 t,C1 f� -71 0 m ' m ' 72.av C p O 1(t �slj•. �D p 30 q1�w SCALE Se lsq`o o"W 0 1 n Sal N i w Z \9 _ CO Vic) o° Commercial Center � J , W. R u DY 5TREET U >9 o iU le3:5Cy' N rte- i4 t �.. 0 _ Ld ti uJ J cY o � CC 7 5•C>a` Ce ter rFor 0 o Health P '0 0 0 a 0 50, 00 IF CWF- 5LE. Y AVF- wUF- EXHIBIT B DOCUMENTS CONTAINING EVIDENCE OF BLIGHTING CONDITIONS RELEVANT TO THE PROPERTY I. Redevelopment Pias for the North Richmond RedevelopMent PEQ.ject Arm, adopted July 14, 1987. 2. Preliminary Report on thetorth Richmgnd Area Redcy-do.12mot Project, adopted March 24, 1987. 3. Draft Environmental Im et�Zeport for the Redcvelopment Plan of the North Richmond Redevelopm n i'rWecttA Area, submitted April 1987. 4. Contra Costa County AR 1290 Implementation Plan, adopted December 1994. 8 T,3 RECEIVE LEGAL NOTICE MAY 2 8 1998 PUBLIC HEARING CLERK BOARD OF SUPERVISORS CONTRA COSTA CO. CONTRA COSTA COUNTY REDEVELOPMENT AGENCY AND THE COUNTY OF CONTRA COSTA (North Richmond Commercial Center) NOTICE IS HEREBY GIVEN that the Contra Costa County Redevelopment Agency (the "Agency") and the Contra Costa Board of Supervisors will hold a joint public hearing on Tuesday, June 9, 1998 at 11:04 a.m. in the Board of Supervisors Chambers, Room 107, located in the McBrien Administration Building at 851 Pine Street, Martinez, California 94555. The hearing may be continued from time to time until completed. Any person desiring the opportunity to be heard will be afforded an opportunity to do so. The purpose of this hearing is to consider approval of a Disposition, Development and Loan Agreement governing the proposed sale of parcels of land owned by the Agency (the "Site") to North Richmond Commercial Development, Inc., a California nonprofit public benefit corporation, for development of an approximately 10,009 square foot building for office and retail use, and related parking, landscaping and other ancillary facilities. The Site under consideration for sale by the Agency comprises approximately 0.4 acres, generally located at the block bounded by 2nd, 3rd, Grove, and Chesley in North Richmond. A negative declaration (the "Negative Declaration") has been prepared by the Agency and the County to serve as the environmental documentation under the California Environmental Quality Act for the redevelopment of the Site as contemplated in the Disposition, Development and Loan Agreement. The Negative Declaration was prepared in connection with the approval by the County of the Final Development Pian for the Site. The County and the Agency intend to use the Negative Declaration as the environmental documentation for purposes of compliance with the California Environmental Quality Act in their consideration for approval of the Disposition, Development and Loan Agreement. Any and all persons having any objections to the proposed Disposition, Development and Loan Agreement, or to the proposed sale of the Site and the development of the improvements on the Site as summarized above, or to the use of the Negative Declaration for the purposes described above, or who deny the regularity of this proceeding or wish to speak on any issue raised by the Disposition, Development and Loan Agreement or the Negative Declaration may appear at the hearing and will be afforded an opportunity to state their objections. If any person desires to challenge in court the approval and execution of the proposed Disposition, development and Loan Agreement, the proposed sale of the Site, or any proceedings in connection therewith, they may be limited to raising only those issues that they or someone else raised at the hearing described in this notice, or in written correspondence delivered to the Agency or the County at, or prior to, the hearing. As required by Section 33433 of the Health and Safety Code, copies of the Disposition, Development and Loan Agreement and the summary of the proposed transaction are available at the offices of the Agency at 651 Pine Street, North Wing, 4th Floor, Martinez, California 94553, for public inspection and copying at a cost not to exceed the cost of duplication. Further information regarding this hearing may be obtained by contacting Beth Lee, Redevelopment Project Manager, at 925-335-1256. Publish in West County Times; May 26, 1998 June 1, 1998 4h15-23-98105981nrichctr.not